• Marco Eeman, General Manager at Billtrust Europe


• 11.05.2023 12:00 pm
#cashflow

In times of crisis, cash is no longer king, it rises to the level of a god. A healthy cash flow is the foundation for responding resiliently to change, and for continuing to innovate and invest. Yet in 2023, many companies still follow up on their cash flow in a classic way. In doing so, they miss out on a lot of money and opportunities.

The global economy is still in dire straits. The IMF warns of a "hard landing" and predicts a 25% risk of the annual global growth rate falling below 2% this year – twice the normal level of this risk. 

In times of crisis, companies' cash flow is under pressure. In any list of reasons why companies fail, lack of cash is right at the top. An unhealthy cash flow can even kill healthy companies. That is why proper monitoring is crucial to quickly detect imbalances and intervene in time before cash flow dries up and it is too late to turn the tide.

You would be surprised how many companies still track their cash flow in a traditional way. Even in 2023, in an era where digital transformation is already quietly becoming an eroded concept, a large group of companies still swear by Excel or even paper. 

Late payments are one of the biggest losses for a company. If customers pay their invoices late but suppliers expect their money on time, companies can end up in particularly dangerous situations. An automated and digitised invoicing process ensures that invoices get to customers faster. It also reduces the risk of human error: a zero too few, a wrong due date or a wrong figure in the bank account... can have far-reaching consequences. In fact, Europe is working on a framework for e-invoicing, which will become compulsory for B2B payments in many countries, including Belgium. Better to work on a digital invoicing process now than to have to do it in a year or two with the knife at your throat.

Companies can then link digital collections to that digital invoicing process. The built-in reminder system automatically signals when the due date is approaching, sends a reminder to the customer who still has an outstanding invoice, and drastically reduces the risk of late payments.

Predicting cash flow

A healthy cash flow is not only vital for business continuity. It is also a prerequisite for being able to look ahead and plan for the right future strategies and plans.

Artificial intelligence can make qualitative forecasts of cash flow based on digital invoicing and digital receivables management. Based on customers' previous payment behaviour, such an AI tool can predict what companies' cash flow will look like in the coming months or even years. This allows them to make data-driven and risk-adjust investment decisions and reliably estimate how much money they can spend without their cash flow going out of balance.

Daring to spend money in times of crisis

When there are economic headwinds, we tend to economise. Yet that is just the ideal time to invest. The courage to spend - responsibly - distinguishes the leading group from the pack.

What do Airbnb, Uber, WhatsApp, HP, Microsoft, and Disney have in common? It could be a quiz question. The answer? They were all founded during a severe crisis. No better time to show boldness.

Late payments and poor cash flow forecasts are two major loss points for businesses. The current turbulence is the time to invest in digital technology and eliminate those loss points. In the coming years, the pace of (technological) change will only accelerate. It will be the most resilient companies that will lead the way. You cannot show resilience without a healthy cash flow.